There has been a considerable rise in the number of business insolvencies during the first quarter of 2011 as the substantial cash flow pressures that have haunted UK SMEs for months came to a head.
From the government spending cuts and 2.5p rise in VAT to December’s adverse weather and the heightened problems with late payment, business owners have had several challenges to contend with, challenges that figures from The Insolvency Service suggest have taken their toll.
It reports that there were 4,121 compulsory liquidations and creditors’ voluntary arrangements during the first three months of the year, up 3.7% quarterly and 2.1% year-on-year.
This figure includes 1,074 compulsory liquidations, which are down on a quarterly and annual basis, and 3,047 creditors’ voluntary liquidations, up 9.7% on Q4 2010 and 11.2% on the corresponding quarter last year.
Furthermore, there were 1,314 other corporate insolvencies during the first quarter comprising 349 receiverships (up 15.6% quarterly), 782 administrations (up 21.8%) and 183 company voluntary arrangements (up 7.6%).
It means that one in every 139 UK firms entered into insolvency proceedings during the 12 months to April (0.7%), illustrating the full extent of the challenges businesses face at present.